8-K
PennyMac Financial Services, Inc. (PFSI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934
Date of Report (Date of earliest eventreported): February 3, 2022
PennyMacFinancial Services, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-38727 | 83-1098934 |
|---|---|---|
| (State or other jurisdiction | (Commission | (IRS Employer |
| of incorporation) | File Number) | Identification No.) |
| 3043 Townsgate Road, Westlake Village, California | 91361 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
(818) 224-7442
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.0001 par value | PFSI | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and FinancialCondition.
On February 3, 2022, PennyMac Financial Services, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter and year ended December 31, 2021. A copy of the press release and the slide presentation used in connection with the Company’s recorded presentation of financial results were made available on February 3, 2022 and are furnished as Exhibits 99.1 and Exhibit 99.2, respectively.
The information in Item 2.02 of this report, including the exhibits hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall it be deemed incorporated by reference into any disclosure document relating to the Company, except to the extent, if any, expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release, dated February 3, 2022, issued by PennyMac Financial Services, Inc. pertaining to its financial results for the fiscal quarter and year ended December 31, 2021. |
| 99.2 | Slide Presentation for use beginning on February 3, 2022 in connection with a recorded presentation of financial results for the fiscal quarter and year ended December 31, 2021. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PENNYMAC FINANCIAL SERVICES, INC. | |
|---|---|
| Dated: February 3, 2022 | /s/ Daniel S. Perotti |
| Daniel S. Perotti<br><br> <br>Senior Managing Director and Chief Financial Officer |
Exhibit 99.1
PennyMac Financial Services, Inc. Reports
Fourth Quarter and Full-Year 2021 Results
WESTLAKE VILLAGE, Calif. – February 3, 2022 – PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $173.1 million for the fourth quarter of 2021, or $2.79 per share on a diluted basis, on revenue of $693.8 million. Book value per share increased to $60.11 from $58.00 at September 30, 2021.
PFSI’s Board of Directors declared a fourth quarter cash dividend of $0.20 per share, payable on February 25, 2022, to common stockholders of record as of February 15, 2022.
Fourth Quarter 2021 Highlights
| · | Pretax income was $234.1 million, down 31 percent from the prior quarter<br>and 62 percent from the fourth quarter of 2020 |
|---|---|
| o | Repurchased 3.9 million shares of PFSI’s common stock<br>at a cost of $257.3 million; also repurchased an additional 848 thousand shares in January at a cost of $56.0 million |
| --- | --- |
| · | Production segment pretax income of $106.5 million, down 68 percent from<br>the prior quarter and 81 percent from the fourth quarter of 2020 primarily due to lower volumes and margins resulting from a transitioning<br>mortgage market and a return to more normal seasonal trends |
| --- | --- |
| o | Consumer direct interest rate lock commitments (IRLCs) were<br>$14.2 billion in unpaid principal balance (UPB), down 13 percent from the prior quarter and up 11 percent from the fourth quarter of<br>2020 |
| --- | --- |
| o | Broker direct IRLCs were $3.9 billion in UPB, down 21 percent<br>from the prior quarter and 32 percent from the fourth quarter of 2020 |
| --- | --- |
| o | Government correspondent IRLCs totaled $15.5 billion in<br>UPB, down 4 percent from the prior quarter and 21 percent from the fourth quarter of 2020 |
| --- | --- |
| o | Total loan acquisitions and originations, including those fulfilled<br>for PMT, were $47.1 billion in UPB, down 20 percent from the prior quarter and 32 percent from the fourth quarter of 2020 |
| --- | --- |
| o | Correspondent acquisitions of conventional loans fulfilled for<br>PennyMac Mortgage Investment Trust (NYSE: PMT) were $17.2 billion in UPB, down 40 percent from the prior quarter and 55 percent from<br>the fourth quarter of 2020 |
| --- | --- |
1
| · | Servicing segment pretax income was $126.1 million, up from $8.0 million<br>in the prior quarter and $42.0 million in the fourth quarter of 2020 |
|---|---|
| o | Pretax income excluding valuation-related items was $217.9 million,<br>up 47 percent from the prior quarter driven by increased income from loss mitigation activity and higher servicing fees |
| --- | --- |
| o | Valuation items included: |
| --- | --- |
| – | $58.4 million in MSR fair value declines and $37.7 million in hedging losses |
| --- | --- |
| · | Net impact on pretax income related to these items was $(96.1) million, or<br>$(1.15) in earnings per share |
| --- | --- |
| · | $4.3 million of reversals related to provisions for losses on active loans |
| --- | --- |
| o | Servicing portfolio grew to $509.7 billion in UPB, up 3 percent<br>from September 30, 2021 and 19 percent from December 31, 2020, driven by production volumes which more than offset elevated prepayment<br>activity |
| --- | --- |
| · | Investment Management segment pretax income was $1.5 million, up from $1.0<br>million in the prior quarter and down from $2.6 million in the fourth quarter of 2020 |
| --- | --- |
| o | Net assets under management (AUM) were $2.4 billion, down 5<br>percent from September 30, 2021, and up 3 percent from December 31, 2020 |
| --- | --- |
Full-Year 2021 Highlights
| · | Net income of $1.0 billion, down from a record $1.6 billion in 2020 |
|---|---|
| · | Pretax income of $1.4 billion, down from a record $2.2 billion in 2020 |
| --- | --- |
| · | Total net revenue of $3.2 billion, down from a record $3.7 billion in 2020 |
| --- | --- |
| · | Repurchased approximately 15.4 million shares of PFSI’s common stock,<br>or more than 20 percent of the total outstanding at the beginning of the year, for an approximate cost of $958 million |
| --- | --- |
| · | Record loan production of $234.5 billion in UPB, an increase of 19 percent<br>from 2020 |
| --- | --- |
| o | $59.8 billion in UPB of originations in the direct lending channels,<br>up 68 percent from 2020 |
| --- | --- |
| · | Servicing portfolio UPB of $509.7 billion at year end, up 19 percent from<br>December 31, 2020 |
| --- | --- |
| · | Issued $1.15 billion of long-term senior unsecured notes |
| --- | --- |
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“PennyMac Financial’s results in the fourth quarter demonstrate the earnings power of our balanced mortgage banking model, with pretax income from our servicing business exceeding that from our production business,” said Chairman and CEO David Spector. “The strong fourth quarter also culminated another year of outstanding operational performance for the company. In fact, Pennymac’s total production for the year, including acquisitions made by PMT, was a record $234 billion in unpaid principal balance, up nearly 20 percent from the prior year. These production volumes led to servicing portfolio growth of 19 percent despite elevated prepayment activity throughout the year, and we ended 2021 with a servicing portfolio of approximately $510 billion in unpaid principal balance with more than 2.1 million customers. 2021 was also a year of exceptional financial performance, as PennyMac Financial delivered a return on equity of 29 percent and returned more than $1 billion in capital to stockholders through repurchases and cash dividends.”
Mr. Spector continued, “Market share in our most profitable channel, consumer direct, has increased meaningfully since last year, which will improve the long-term earnings profile of our production business over time. Our newly evolved brand and marketing focus along with deployment of transformational technologies in our direct lending channels are key components of multi-year investments to achieve our medium-term goals. At the same time, as the market is transitioning to a higher rate environment with elevated levels of competition, we will remain disciplined, taking advantage of our operational scale, while staying focused on profitability and shareholder returns.”
3
The following table presents the contributions of PennyMac Financial’s segments to pretax income:
| Quarter ended December 31, 2021 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mortgage Banking | Investment | |||||||||||||
| Production | Servicing | Total | Management | Total | ||||||||||
| (in thousands) | ||||||||||||||
| Revenue | ||||||||||||||
| Net gains on loans held for sale at fair value | $ | 314,826 | $ | 185,832 | $ | 500,658 | $ | - | $ | 500,658 | ||||
| Loan origination fees | 88,245 | - | 88,245 | - | 88,245 | |||||||||
| Fulfillment fees from PMT | 20,150 | - | 20,150 | - | 20,150 | |||||||||
| Net loan servicing fees | - | 94,733 | 94,733 | - | 94,733 | |||||||||
| Management fees | - | - | - | 8,919 | 8,919 | |||||||||
| Net interest expense: | ||||||||||||||
| Interest income | 40,038 | 28,941 | 68,979 | - | 68,979 | |||||||||
| Interest expense | 35,741 | 54,101 | 89,842 | 2 | 89,844 | |||||||||
| 4,297 | (25,160 | ) | (20,863 | ) | (2 | ) | (20,865 | ) | ||||||
| Other | 178 | 250 | 428 | 1,543 | 1,971 | |||||||||
| Total net revenue | 427,696 | 255,655 | 683,351 | 10,460 | 693,811 | |||||||||
| Expenses | 321,188 | 129,599 | 450,787 | 8,913 | 459,700 | |||||||||
| Pretax income | $ | 106,508 | $ | 126,056 | $ | 232,564 | $ | 1,547 | $ | 234,111 |
Production Segment
The Production segment includes the correspondent acquisition of newly originated government-insured mortgage loans for PennyMac Financial’s own account, fulfillment services on behalf of PMT and direct lending through the consumer direct and broker direct channels, including the underwriting and acquisition of loans from correspondent sellers on a non-delegated basis.
PennyMac Financial’s loan production activity for the quarter totaled $47.1 billion in UPB, $29.9 billion of which was for its own account, and $17.2 billion of which was fee-based fulfillment activity for PMT.
Correspondent government and direct lending IRLCs totaled $33.6 billion in UPB, down 10 percent from the prior quarter and 12 percent from the fourth quarter of 2020.
Production segment pretax income was $106.5 million, down 68 percent from the prior quarter and 81 percent from the fourth quarter of 2020 primarily due to lower volumes and margins resulting from a transitioning mortgage market and a return to more normal seasonal trends. Production segment revenue totaled $427.7 million, down 33 percent from the prior quarter and 48 percent from the fourth quarter of 2020. The quarter-over-quarter decrease was driven by a $181.7 million decrease in net gains on loans held for sale primarily as a result of lower margins and lock volumes.
4
The components of net gains on loans held for sale are detailed in the following table:
| Quarter ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, <br> 2021 | September 30, <br> 2021 | December 31, <br> 2020 | |||||||
| (in thousands) | |||||||||
| Receipt of MSRs and recognition of MSLs in loan sale transactions | $ | 467,141 | $ | 398,665 | $ | 367,501 | |||
| Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust | (12,701 | ) | (12,976 | ) | (11,868 | ) | |||
| Provision of liability for representations and warranties, net | (315 | ) | (2,206 | ) | (4,667 | ) | |||
| Cash gain ^(1)^ | 37,537 | 126,053 | 459,887 | ||||||
| Fair value changes of pipeline, inventory and hedges | 8,996 | 117,218 | 48,208 | ||||||
| Net gains on mortgage loans held for sale | $ | 500,658 | $ | 626,754 | $ | 859,061 | |||
| Net gains on mortgage loans held for sale by segment: | |||||||||
| Production | $ | 314,826 | $ | 496,568 | $ | 659,915 | |||
| Servicing | $ | 185,832 | $ | 130,186 | $ | 199,146 |
^(1)^ Net of cash hedging results
Loan origination fees for the quarter totaled $88.2 million, down 7 percent from the prior quarter and 6 percent from the fourth quarter of 2020. The decrease from the prior quarter was driven by lower production volumes.
PennyMac Financial performs fulfillment services for conventional conforming and jumbo loans acquired by PMT from non-affiliates in its correspondent production business. These services include, but are not limited to, marketing, relationship management, correspondent seller approval and monitoring, loan file review, underwriting, pricing, hedging and activities related to the subsequent sale and securitization of loans in the secondary mortgage markets for PMT.
Fees earned from the fulfillment of correspondent loans on behalf of PMT totaled $20.2 million in the fourth quarter, down 54 percent from the prior quarter and 72 percent from the fourth quarter of 2020. The quarter-over-quarter decrease in fulfillment fee revenue was driven by lower conventional acquisition volumes and a decrease in the weighted average fulfillment fee. The weighted average fulfillment fee rate decrease reflects discretionary reductions to facilitate successful loan acquisitions by PMT in a market impacted by significant levels of competition for conventional loans, including from the GSEs.
Net interest income totaled $4.3 million, down from $4.7 million in the prior quarter. Interest income in the fourth quarter totaled $40.0 million, up from $33.3 million in the prior quarter, and interest expense totaled $35.7 million, up from $28.6 million in the prior quarter, due to a higher balance of loans held-for-sale during the quarter.
5
Production segment expenses were $321.2 million, up 4 percent from the prior quarter driven by our brand and technology initiatives. Production segment expenses were up 28 percent from the fourth quarter of 2020 as a result of higher volumes in the consumer direct channel.
Servicing Segment
The Servicing segment includes income from owned MSRs, subservicing and special servicing activities. Servicing segment pretax income was $126.1 million, up from $8.0 million in the prior quarter and $42.0 million in the fourth quarter of 2020. Servicing segment net revenues totaled $255.7 million, up from $136.8 million in the prior quarter and $207.6 million in the fourth quarter of 2020. The quarter-over-quarter increase was primarily driven by a $55.6 million increase in net gains on loans held for sale and higher net loan servicing fees.
Revenue from net loan servicing fees totaled $94.7 million, up from $33.6 million in the prior quarter primarily driven by lower net valuation related declines and increased loan servicing fees due to a larger servicing portfolio. Revenue from loan servicing fees included $287.9 million in servicing fees, reduced by $97.0 million from the realization of MSR cash flows. Net valuation-related losses totaled $96.1 million, and included MSR fair value declines of $58.4 million, and hedging losses of $37.7 million. The decline in MSR fair value was comprised of $28.1 million in fair value declines due to changes in interest rates, primarily due to a significant flattening of the yield curve and $30.3 million in other valuation declines, primarily due to increases to short-term prepayment projections. The hedging losses were largely driven by elevated hedge costs during the quarter.
6
The following table presents a breakdown of net loan servicing fees:
| Quarter ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, <br> 2021 | September 30, <br> 2021 | December 31, <br> 2020 | |||||||
| (in thousands) | |||||||||
| Loan servicing fees ^(1)^ | $ | 287,888 | $ | 267,758 | $ | 262,740 | |||
| Changes in fair value of MSRs and MSLs resulting from: | |||||||||
| Realization of cash flows | (97,025 | ) | (82,217 | ) | (89,611 | ) | |||
| Change in fair value inputs | (58,407 | ) | (65,452 | ) | (44,163 | ) | |||
| Change in fair value of excess servicing spread financing | - | - | 6,677 | ||||||
| Hedging losses | (37,723 | ) | (86,459 | ) | (109,147 | ) | |||
| Net change in fair value of MSRs and MSLs | (193,155 | ) | (234,128 | ) | (236,244 | ) | |||
| Net loan servicing fees | $ | 94,733 | $ | 33,630 | $ | 26,496 |
^(1)^ Includes contractually-specified servicing fees
Servicing segment revenue included $185.8 million in net gains on loans held for sale related to reperforming government-insured and guaranteed loans purchased out of Ginnie Mae securitizations, or early buy out loans (EBOs). These gains were up from $130.2 million in the prior quarter and down from $199.1 million in the fourth quarter of 2020. These EBOs are previously delinquent loans that were brought back to performing status through PennyMac Financial’s successful servicing efforts, primarily through loan modifications or FHA Partial Claims. With respect to the FHA Partial Claims, the reperforming loans must remain current for a minimum of six months to be eligible for resecuritization.
Net interest expense totaled $25.2 million, versus net interest expense of $27.1 million in the prior quarter and $18.2 million in the fourth quarter of 2020. Interest income was $28.9 million, down from $35.0 million in the prior quarter driven by a decrease in average EBO balances held for sale. Interest expense was $54.1 million, down from $62.1 million in the prior quarter driven by a decrease in average balances of financing for EBO loans.
Servicing segment expenses totaled $129.6 million, essentially unchanged from the prior quarter.
The total servicing portfolio grew to $509.7 billion in UPB at December 31, 2021, an increase of 3 percent from September 30, 2021 and 19 percent from December 31, 2020. PennyMac Financial subservices and conducts special servicing for $221.9 billion in UPB, an increase of 2 percent from September 30, 2021 and 27 percent from December 31, 2020. PennyMac Financial’s owned MSR portfolio grew to $287.8 billion in UPB, an increase of 4 percent from September 30, 2021 and 14 percent from December 31, 2020. Mortgage servicing liabilities decreased substantially from September 30, 2021 due to significant reperformance of previously-delinquent loans sold to third parties.
7
The table below details PennyMac Financial’s servicing portfolio UPB:
| December 31, <br> 2021 | September 30, <br> 2021 | December 31, <br> 2020 | ||||
|---|---|---|---|---|---|---|
| (in thousands) | ||||||
| Prime servicing: | ||||||
| Owned | ||||||
| Mortgage servicing rights and liabilities | ||||||
| Originated | $ | 254,524,015 | $ | 241,193,600 | $ | 199,655,361 |
| Acquisitions | 23,861,358 | 26,913,133 | 41,612,940 | |||
| 278,385,373 | 268,106,733 | 241,268,301 | ||||
| Loans held for sale | 9,430,766 | 9,295,126 | 11,063,938 | |||
| 287,816,139 | 277,401,859 | 252,332,239 | ||||
| Subserviced for PMT | 221,864,120 | 217,984,987 | 174,360,317 | |||
| Total prime servicing | 509,680,259 | 495,386,846 | 426,692,556 | |||
| Special servicing - subserviced for PMT | 28,022 | 28,801 | 58,274 | |||
| Total loans serviced | $ | 509,708,281 | $ | 495,415,647 | $ | 426,750,830 |
| Loans serviced: | ||||||
| Owned | ||||||
| Mortgage servicing rights and liabilities | $ | 278,385,373 | $ | 268,106,733 | $ | 241,268,301 |
| Loans held for sale | 9,430,766 | 9,295,126 | 11,063,938 | |||
| 287,816,139 | 277,401,859 | 252,332,239 | ||||
| Subserviced | 221,892,142 | 218,013,788 | 174,418,591 | |||
| Total loans serviced | $ | 509,708,281 | $ | 495,415,647 | $ | 426,750,830 |
Investment Management Segment
PennyMac Financial manages PMT for which it earns base management fees and may earn incentive compensation. Net AUM were $2.4 billion as of December 31, 2021, down 5 percent from September 30, 2021 and up 3 percent from December 31, 2020.
Pretax income for the Investment Management segment was $1.5 million, up from $1.0 million in the prior quarter and down from $2.6 million in the fourth quarter of 2020. Management fees, which include base management and performance incentive fees from PMT were $8.9 million, up from $8.5 million in the prior quarter and up from $8.7 million in the fourth quarter of 2020. Base management fees were $8.9 million, up from $8.8 million in the prior quarter and $8.7 million in the fourth quarter of 2020.
8
The following table presents a breakdown of management fees:
| Quarter ended | |||||||
|---|---|---|---|---|---|---|---|
| December 31, <br> 2021 | September 30, <br> 2021 | December 31, <br> 2020 | |||||
| (in thousands) | |||||||
| Management fees: | |||||||
| Base | $ | 8,919 | $ | 8,778 | $ | 8,687 | |
| Performance incentive (adjustment) | - | (258 | ) | - | |||
| Total management fees | $ | 8,919 | $ | 8,520 | $ | 8,687 | |
| Net assets of PennyMac Mortgage Investment Trust | $ | 2,367,518 | $ | 2,479,327 | $ | 2,296,859 |
Investment Management segment expenses totaled $8.9 million, down 2 percent from the prior quarter and up 25 percent from the fourth quarter of 2020.
Consolidated Expenses
Total expenses were $459.7 million, up 3 percent from the prior quarter and up 8 percent from the fourth quarter of 2020. The quarter-over-quarter increase was driven by the increase in production expenses noted above.
***
Management’s slide presentation will be available in the Investor Relations section of the Company’s website at ir.pennymacfinancial.com after the market closes on Thursday, February 3, 2022.
-
About PennyMac Financial Services, Inc.
PennyMac Financial Services, Inc. is a specialty financial services firm focused on the production and servicing of U.S. mortgage loans and the management of investments related to the U.S. mortgage market. Founded in 2008, the company is recognized as a leader in the U.S. residential mortgage industry and employs approximately 6,800 people across the country. In 2021, PennyMac Financial’s production of newly originated loans totaled $234 billion in unpaid principal balance, making it the second largest mortgage lender in the nation. As of December 31, 2021, PennyMac Financial serviced loans totaling $510 billion in unpaid principal balance, making it a top ten mortgage servicer in the nation. Additional information about PennyMac Financial Services, Inc. is available at ir.pennymacfinancial.com.
| Media | Investors |
|---|---|
| Kristyn<br> Clark | Kevin<br> Chamberlain |
| kristyn.clark@pennymac.com | Isaac<br> Garden |
| (805)<br> 395-9943 | PFSI_IR@pennymac.com |
| (818)<br> 224-7028 |
9
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections, and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies, as well as industry and market conditions, all of which are subject to change. Words like “believe,” “expect,” “anticipate,” “promise,” “project,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: our exposure to risks of loss and disruptions in operations resulting from adverse weather conditions, man-made or natural disasters, climate change and pandemics such as COVID-19; failure to modify, resell or refinance early buyout loans; changes in prevailing interest rates; the continually changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions that may result from any noncompliance with the laws and regulations applicable to our businesses; the mortgage lending and servicing-related regulations promulgated by the Consumer Financial Protection Bureau and its enforcement of these regulations; our dependence on U.S. government-sponsored entities and changes in their current roles or their guarantees or guidelines; changes to government mortgage modification programs; the licensing and operational requirements of states and other jurisdictions applicable to the Company’s businesses, to which our bank competitors are not subject; foreclosure delays and changes in foreclosure practices; changes in macroeconomic and U.S. real estate market conditions; difficulties inherent in growing loan production volume; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights and our success in winning bids; our substantial amount of indebtedness; the discontinuation of LIBOR; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant source of financing for, and revenue related to, our mortgage banking business; maintaining sufficient capital and liquidity to support business growth including compliance with financial covenants; our obligation to indemnify third-party purchasers or repurchase loans if loans that we originate, acquire, service or assist in the fulfillment of, fail to meet certain criteria or characteristics or under other circumstances; our obligation to indemnify PMT if our services fail to meet certain criteria or characteristics or under other circumstances; decreases in the returns on the assets that we select and manage for our clients, and our resulting management and incentive fees; the extensive amount of regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among us and our advised entities; the effect of public opinion on our reputation; our recent growth; our ability to effectively identify, manage, monitor and mitigate financial risks; our initiation or expansion of new business activities or strategies; our ability to detect misconduct and fraud; our ability to mitigate cybersecurity risks and cyber incidents; our ability to pay dividends to our stockholders; and our organizational structure and certain requirements in our charter documents. You should not place undue reliance on any forward- looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this press release are current as of the date of this release only.
The Company’s earnings materials contain financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”), such as pretax income excluding valuation-related items that provide a meaningful perspective on the Company’s business results since the Company utilizes this information to evaluate and manage the business. Non-GAAP disclosure has limitations as an analytical tool and should not be viewed as a substitute for financial information determined in accordance with GAAP.
10
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| September 30, <br> 2021 | December 31, <br> 2020 | ||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Cash | 340,069 | $ | 476,497 | $ | 532,716 |
| Short-term investments at fair value | 6,873 | 5,046 | 15,217 | ||
| Loans held for sale at fair value | 9,742,483 | 9,659,695 | 11,616,400 | ||
| Assets purchased from PennyMac Mortgage Investment Trust under agreements to resell pledged to creditors | - | - | 80,862 | ||
| Derivative assets | 333,695 | 429,984 | 711,238 | ||
| Servicing advances, net | 702,160 | 522,906 | 579,528 | ||
| Mortgage servicing rights at fair value | 3,878,078 | 3,611,120 | 2,581,174 | ||
| Operating lease right-of-use assets | 89,040 | 85,266 | 74,934 | ||
| Investment in PennyMac Mortgage Investment Trust at fair value | 1,300 | 1,477 | 1,105 | ||
| Receivable from PennyMac Mortgage Investment Trust | 40,091 | 49,993 | 87,005 | ||
| Loans eligible for repurchase | 3,026,207 | 4,335,378 | 14,625,447 | ||
| Other | 616,616 | 567,776 | 692,169 | ||
| Total assets | 18,776,612 | $ | 19,745,138 | $ | 31,597,795 |
| LIABILITIES | |||||
| Assets sold under agreements to repurchase | 7,292,735 | $ | 6,897,157 | $ | 9,654,797 |
| Mortgage loan participation and sale agreements | 479,845 | 519,784 | 521,477 | ||
| Obligations under capital lease | 3,489 | 5,583 | 11,864 | ||
| Notes payable secured by mortgage servicing assets | 1,297,622 | 1,297,176 | 1,295,840 | ||
| Unsecured senior notes | 1,776,219 | 1,783,230 | 645,820 | ||
| Excess servicing spread financing payable to PennyMac Mortgage Investment Trust at fair value | - | - | 131,750 | ||
| Derivative liabilities | 22,606 | 14,204 | 42,638 | ||
| Mortgage servicing liabilities at fair value | 2,816 | 47,567 | 45,324 | ||
| Accounts payable and accrued expenses | 359,413 | 358,944 | 308,398 | ||
| Operating lease liabilities | 110,003 | 105,452 | 94,193 | ||
| Payable to PennyMac Mortgage Investment Trust | 228,019 | 138,972 | 140,306 | ||
| Payable to exchanged Private National Mortgage Acceptance<br> Company, LLC unitholders under tax receivable agreement | 30,530 | 31,815 | 35,165 | ||
| Income taxes payable | 685,262 | 659,768 | 622,700 | ||
| Liability for loans eligible for repurchase | 3,026,207 | 4,335,378 | 14,625,447 | ||
| Liability for losses under representations and warranties | 43,521 | 45,806 | 32,688 | ||
| Total liabilities | 15,358,287 | 16,240,836 | 28,208,407 | ||
| STOCKHOLDERS' EQUITY | |||||
| Common stock¾authorized 200,000,000 shares of 0.0001 par value; issued and outstanding 56,867,202, 60,419,578, and 70,905,532 shares, respectively | 6 | 6 | 7 | ||
| Additional paid-in capital | 125,396 | 372,198 | 1,047,052 | ||
| Retained earnings | 3,292,923 | 3,132,098 | 2,342,329 | ||
| Total stockholders' equity | 3,418,325 | 3,504,302 | 3,389,388 | ||
| Total liabilities and stockholders’ equity | 18,776,612 | $ | 19,745,138 | $ | 31,597,795 |
All values are in US Dollars.
11
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Quarter ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, <br> 2021 | September 30, <br> 2021 | December 31, <br> 2020 | |||||||
| (in thousands, except earnings per share) | |||||||||
| Revenue | |||||||||
| Net gains on loans held for sale at fair value | $ | 500,658 | $ | 626,754 | $ | 859,061 | |||
| Loan origination fees | 88,245 | 94,581 | 93,460 | ||||||
| Fulfillment fees from PennyMac Mortgage Investment Trust | 20,150 | 43,922 | 72,606 | ||||||
| Net loan servicing fees: | |||||||||
| Loan servicing fees | 287,888 | 267,758 | 262,740 | ||||||
| Change in fair value of mortgage<br> servicing rights, mortgage servicing liabilities and excess servicing spread financing | (155,432 | ) | (147,669 | ) | (127,097 | ) | |||
| Hedging results | (37,723 | ) | (86,459 | ) | (109,147 | ) | |||
| Net loan servicing fees | 94,733 | 33,630 | 26,496 | ||||||
| Net interest expense: | |||||||||
| Interest income | 68,979 | 68,312 | 74,192 | ||||||
| Interest expense | 89,844 | 90,711 | 93,653 | ||||||
| (20,865 | ) | (22,399 | ) | (19,461 | ) | ||||
| Management fees from PennyMac Mortgage Investment Trust | 8,919 | 8,520 | 8,687 | ||||||
| Other | 1,971 | 1,604 | 1,297 | ||||||
| Total net revenue | 693,811 | 786,612 | 1,042,146 | ||||||
| Expenses | |||||||||
| Compensation | 226,723 | 249,183 | 187,807 | ||||||
| Loan origination | 86,789 | 80,932 | 69,069 | ||||||
| Technology | 41,112 | 32,406 | 42,594 | ||||||
| Professional services | 31,734 | 24,429 | 19,853 | ||||||
| Servicing | 31,470 | 27,892 | 87,155 | ||||||
| Marketing and advertising | 16,568 | 11,360 | 4,355 | ||||||
| Occupancy and equipment | 8,354 | 9,389 | 8,535 | ||||||
| Other | 16,950 | 11,472 | 5,552 | ||||||
| Total expenses | 459,700 | 447,063 | 424,920 | ||||||
| Income before provision for income taxes | 234,111 | 339,549 | 617,226 | ||||||
| Provision for income taxes | 61,028 | 90,239 | 164,422 | ||||||
| Net income | $ | 173,083 | $ | 249,310 | $ | 452,804 | |||
| Earnings per share | |||||||||
| Basic | $ | 2.97 | $ | 4.02 | $ | 6.31 | |||
| Diluted | $ | 2.79 | $ | 3.80 | $ | 5.97 | |||
| Weighted-average common shares outstanding | |||||||||
| Basic | 58,247 | 62,085 | 71,793 | ||||||
| Diluted | 61,944 | 65,653 | 75,898 | ||||||
| Dividend declared per share | $ | 0.20 | $ | 0.20 | $ | 0.15 |
12
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Year ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2019 | |||||||
| (in thousands, except earnings per share) | |||||||||
| Revenue | |||||||||
| Net gains on loans held for sale at fair value | $ | 2,464,401 | $ | 2,740,785 | $ | 725,528 | |||
| Loan origination fees | 384,154 | 285,551 | 174,156 | ||||||
| Fulfillment fees from PennyMac Mortgage Investment Trust | 178,927 | 222,200 | 160,610 | ||||||
| Net loan servicing fees: | |||||||||
| Loan servicing fees: | |||||||||
| From non-affiliates | 875,570 | 814,646 | 730,165 | ||||||
| From PennyMac Mortgage Investment Trust | 80,658 | 67,181 | 48,797 | ||||||
| Other fees | 118,884 | 116,464 | 98,564 | ||||||
| 1,075,112 | 998,291 | 877,526 | |||||||
| Change in fair value of mortgage servicing rights, mortgage servicing liabilities and excess servicing spread financing | (416,943 | ) | (1,477,023 | ) | (979,358 | ) | |||
| Hedging results | (475,215 | ) | 918,180 | 395,497 | |||||
| Net loan servicing fees | 182,954 | 439,448 | 293,665 | ||||||
| Net interest (expense) income: | |||||||||
| Interest income | 300,169 | 247,026 | 288,700 | ||||||
| Interest expense | 390,699 | 271,551 | 211,979 | ||||||
| (90,530 | ) | (24,525 | ) | 76,721 | |||||
| Management fees from PennyMac Mortgage Investment Trust | 37,801 | 34,538 | 36,492 | ||||||
| Other | 9,654 | 7,600 | 10,232 | ||||||
| Total net revenue | 3,167,361 | 3,705,597 | 1,477,404 | ||||||
| Expenses | |||||||||
| Compensation | 999,802 | 738,569 | 503,458 | ||||||
| Loan origination | 330,788 | 219,746 | 117,338 | ||||||
| Technology | 141,426 | 112,570 | 67,946 | ||||||
| Servicing | 109,835 | 256,934 | 164,697 | ||||||
| Professional services | 94,283 | 64,064 | 32,859 | ||||||
| Marketing and advertising | 44,806 | 8,658 | 5,165 | ||||||
| Occupancy and equipment | 35,810 | 33,357 | 28,916 | ||||||
| Other | 51,428 | 31,090 | 27,581 | ||||||
| Total expenses | 1,808,178 | 1,464,988 | 947,960 | ||||||
| Income before provision for income taxes | 1,359,183 | 2,240,609 | 529,444 | ||||||
| Provision for income taxes | 355,693 | 593,725 | 136,479 | ||||||
| Net income | $ | 1,003,490 | $ | 1,646,884 | $ | 392,965 | |||
| Earnings per share | |||||||||
| Basic | $ | 15.73 | $ | 21.91 | $ | 5.02 | |||
| Diluted | $ | 14.87 | $ | 20.92 | $ | 4.89 | |||
| Weighted average shares outstanding | |||||||||
| Basic | 63,799 | 75,161 | 78,466 | ||||||
| Diluted | 67,471 | 78,728 | 81,076 |
13
Exhibit 99.2
4Q21 EARNINGS REPORT PennyMac Financial Services, Inc. February 2022
2 This presentation contains forward - looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections and assumptions with respect to, among other things, the Company’s financial results, future operations, business pl ans and investment strategies, as well as industry and market conditions, all of which are subject to change. Words like “believe,” “expect,” “anticipate,” “promise,” “project,” “plan,” a nd other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward - looking statem ents. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. These forward - looking statements include, but are not limited to, statements regarding the future impact of the COVID - 19 pandemic on our business; future loan origination, servicing and production; future loan delinquencies, forbearances and s erv icing advances; future early buyout activity and other business and financial expectations. Factors which could cause actual results to differ materially from historical results or those antici pat ed include, but are not limited to: our exposure to risks of loss and disruptions in operations resulting from adverse weather conditions, man - made or natural disasters, climate change and pandemics such as COVID - 19; failure to modify, resell or refinance early buyout loans; the continually changing federal, state and local laws and regulations applicable to the highly regulated indus try in which we operate; lawsuits or governmental actions that may result from any noncompliance with the laws and regulations applicable to our businesses; the mortgage lending and servicing - related re gulations promulgated by the Consumer Financial Protection Bureau and its enforcement of these regulations; our dependence on U.S. government - sponsored entities and changes in their curre nt roles or their guarantees or guidelines; changes to government mortgage modification programs; the licensing and operational requirements of states and other jurisdictions applicable to th e C ompany’s businesses, to which our bank competitors are not subject; foreclosure delays and changes in foreclosure practices; changes in macroeconomic and U.S. real estate market conditions; dif fic ulties inherent in growing loan production volume; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage s erv icing rights and our success in winning bids; changes in prevailing interest rates; our substantial amount of indebtedness; the discontinuation of LIBOR; increases in loan delinquencies and def aul ts; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant source of financing for, and revenue related to, our mortgage banking business; maintaining sufficient cap ital and liquidity to support business growth including compliance with financial covenants; our obligation to indemnify third - party purchasers or repurchase loans if loans that we originate, acq uire, service or assist in the fulfillment of, fail to meet certain criteria or characteristics or under other circumstances; our obligation to indemnify PMT if our services fail to meet certain criteria o r c haracteristics or under other circumstances; decreases in the returns on the assets that we select and manage for our clients, and our resulting management and incentive fees; the extensive amount o f r egulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among us and our advised entities; the effect o f p ublic opinion on our reputation; our recent growth; our ability to effectively identify, manage, monitor and mitigate financial risks; our initiation or expansion of new business activities or st rategies; our ability to detect misconduct and fraud; our ability to mitigate cybersecurity risks and cyber incidents; our ability to pay dividends to our stockholders; and our organizational structure a nd certain requirements in our charter documents. You should not place undue reliance on any forward - looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly u pda te or revise any forward - looking statements or any other information contained herein, and the statements made in this presentation are current as of the date of this presentation on ly. This presentation contains financial information calculated other than in accordance with U.S. generally accepted accounting pri nciples (“GAAP”), such as pretax income excluding valuation - related items that provide a meaningful perspective on the Company’s business results since the Company utilizes this information to eva luate and manage the business. Non - GAAP disclosure has limitations as an analytical tool and should not be viewed as a substitute for financial information determined in accordance wi th GAAP. FORWARD - LOOKING STATEMENTS
FOURTH QUARTER HIGHLIGHTS 3 PRODUCTION INVESTMENT MANAGEMENT Net income $173mm 4Q21 Results Diluted EPS (1) $2.79 Return on equity 20% Book value per share $60.11 Capital Return Shares repurchased 3.9mm Dividend per common share $0.20 Pretax income $107mm Consumer direct lock volume $14.2bn Government correspondent lock volume $15.5bn Broker direct lock volume $3.9bn Total loan acquisitions and originations (2) $47.1bn Pretax income $1.5mm Assets under management $2.4bn Revenue $10.5mm Note: All figures are for 4Q21 or as of 12/31/21 (1) EPS = earnings per share. MSR = mortgage servicing rights. UPB = unpaid principal balance (2) Includes volume fulfilled or subserviced for PennyMac Mortgage Investment Trust (NYSE: PMT). ( 3 ) Excludes $58.4 million in MSR fair value declines, $37.7 million in hedging losses and a $4.3 million reversal related to provisions for los ses on active loans. See slide 13 for additional details . SERVICING Pretax income $126mm MSR (1) fair value changes and hedging results $(96)mm Pretax income excluding valuation - related items (3) $218mm MSR fair value changes and hedging impact to EPS $(1.15) Total servicing portfolio UPB (1)(2) $510bn
2021 ACCOMPLISHMENTS DEMONSTRATE BEST - IN - CLASS MANAGEMENT 4 Record operational results… …drove exceptional financial performance... …while positioning for the long - term … …and returning capital to shareholders. Total production (1) $234bn Consumer direct originations $43bn Servicing portfolio (1) $510bn Net income $1.0bn Diluted EPS $14.87 Return on equity 29% Share repurchases $958mm Total capital returned >$1bn Cash dividends $ 53mm Long - term debt raised $1.15bn Investments in transformational technology $100mm Note: All figures are for the full year 2021 or as of 12/31/21 (1) Includes volume fulfilled or subserviced for PMT
5 ORIGINATION MARKET REMAINS HISTORICALLY LARGE U.S. Mortgage Origination Market (1) ($ in trillions) Mortgage Rates Remain Low on a Historical Basis • Economic forecasts for 2022 total originations average $ 3.1 trillion; while a large market by historical standards, it reflects a substantial decline from a record 2021 ‒ Excess industry capacity established in recent years will need to be right - sized • Purchase origination market expected to total a record $ 2.0 trillion ‒ Pennymac has historically over - indexed the purchase money market and was the largest producer of purchase - money loans in the U.S . in the first nine months of 2021 (4) (1) Actual originations: Inside Mortgage Finance. Purchase originations for 4Q21 and forecast for total originations: Average of Mortgage Bankers Association (1/21/22 ), Fannie Mae (1/10/22), and Freddie Mac ( 1/7/22 ) forecasts . (2) Freddie Mac Primary Mortgage Market Survey. 3.55 % as of 1/27/22 . (3) Bloomberg: Difference between Freddie Mac Primary Mortgage Market Survey and the 30 - Year Fannie Mae or Freddie Mac Par Coupon ( MTGEFNCL) Index. (4) Inside Mortgage Finance. Pennymac collectively refers to PFSI and PMT, an independent mortgage real estate investment trust listed on the New York Stock Exchan ge . ( 2 ) (3) 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Average 30-year fixed rate mortgage Primary/secondary spread $1.3 $1.5 $2.0 $2.0 $1.1 $2.6 $2.8 $1.1 $2.3 $4.1 $4.8 $3.1 2019 2020 2021 2022E Purchase Refinance
$172 ($15) $262 $307 $147 $147 $543 $800 2018 2019 2020 2021 Pretax income Pretax income excluding valuation-related changes BALANCED BUSINESS MODEL IS A KEY STRATEGIC ADVANTAGE 6 Production Pretax Income ($ in millions) Servicing Pretax Income ($ in millions) (1) • Our consumer direct lending channel remains a significant contributor to PFSI’s sustained profitability • Servicing income reflects a growing portfolio, economies of scale and loss mitigation activities • Disciplined focus on expense management given current market environment (1) Valuation - related changes include MSR fair value changes before recognition of realization of cash flows, related hedging and o ther gains (losses), and provision for losses on active loans considered in the assessment of MSR fair value changes – see slide 2 3. (2) See slide 2 0 $87 $528 $1,964 $1,044 2018 2019 2020 2021 Estimated contribution from direct lending (consumer and broker) The contracting mortgage origination market presents headwinds for PFSI’s performance; ROE is projected to trend lower before returning to its pre - COVID average over time (2)
TRANSFORMATIVE BRAND AND TECHNOLOGY INVESTMENTS SUPPORT THE NEXT STAGE OF PENNYMAC’S GROWTH 7 • Technology rollouts for our direct - lending businesses expected in the near term ‒ Streamlined processes ‒ Enhanced self - serve capabilities ‒ Increased efficiency for loan officers and brokers ‒ Common platform across all production channels enhances operational efficiency • Expected to drive higher conversion, improved portfolio retention, faster closing times and lower loan manufacturing costs • State - of - the - art technology combining proprietary and leading third - party platforms • Launched a new evolution of Pennymac’s brand in January ‒ Reflects Pennymac’s commitment to its core values (Accountable, Reliable, Ethical) and underscores our mission to be the most trusted and respected partner in the industry ‒ Critical to Pennymac’s scale and evolution • Targeted approach with disciplined management of related expenses to drive new customer acquisition and increased recapture • Plans for additional campaign rollouts throughout 2022 (TV, consumer communication, social , website, etc .) Technology Marketing • Proven ability to invest in technology to drive enhanced customer service, operational scale and efficiency • Uniquely positioned to represent trust, stability and long - term partnership across all business lines We expect the success of Pennymac’s direct lending channels to continue as we leverage increased brand awareness and technology enhancements
0.3% 1.1% 2.2% 2.3% 2017 2018 2019 2020 2021 N/A PENNYMAC’S MARKET SHARE OVER TIME ACROSS ITS BUSINESSES 8 0.5% 0.5% 0.7% 0.9% 1.4% 2017 2018 2019 2020 2021 2.3% 2.8% 3.4% 3.7% 4.1% 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 Note: All figures are for PFSI and include volume fulfilled or subserviced for PMT (1) Historical market share estimates based on Inside Mortgage Finance. Inside Mortgage Finance estimates $4.8 trillion in total ori gination volume for 2021. For 2021, we estimate the correspondent channel represented 22% of the overall origination market, retail represented 63% and broker represented 15%. Loan servicing market share is based on PFSI’s servicing portfolio UPB of $510 billion divided by an estimated $12.4 trillion in mortgage debt outstanding. Correspondent Production Market Share (1) Consumer Direct Market Share (1) Loan Servicing Market Share (1) Broker Direct Market Share (1) 10.5% 11.8% 14.9% 17.7% 16.8% 2017 2018 2019 2020 2021
$1.0 $0.9 $0.9 $3.5 $3.1 $2.8 $4.5 $4.0 $3.7 $5.7 $4.9 $3.9 4Q20 3Q21 4Q21 Government loans Conventional loans Total locks PRODUCTION SEGMENT HIGHLIGHTS – VOLUME BY CHANNEL 9 Correspondent (UPB in billions ) Consumer Direct (UPB in billions ) Broker Direct (UPB in billions ) January 2022 January 2022 January 2022 Note: Figures may not sum due to rounding ( 1 ) For government - insured loans, PFSI earns income from holding and selling or securitizing the loans (2) For conventional and jumbo loans, PFSI earns a fulfillment fee from PMT rather than income from holding and selling or securi tiz ing the loans ( 3) Includes locks related to PMT loan acquisitions, including conventional loans for which PFSI earns a fulfillment fee (4) Commitments to originate mortgage loans at specified terms at period end $18.9 $15.4 $15.7 $38.0 $28.6 $17.2 $56.9 $44.0 $32.8 $59.2 $45.6 $30.3 4Q20 3Q21 4Q21 Government loans Conventional loans for PMT Total locks $4.4 $4.9 $4.3 $3.7 $6.2 $6.3 $8.0 $11.1 $10.6 $12.8 $16.3 $14.2 4Q20 3Q21 4Q21 Government loans Conventional loans Total locks (1) (2) (3) Locks: (UPB in billions) $7.5 Locks: (UPB in billions) $3.7 Locks: (UPB in billions) $1.2 Acquisitions: (UPB in billions) $7.6 Originations: (UPB in billions) $3.2 Originations: (UPB in billions) $0.8 Committed pipeline (4) : (UPB in billions) $4.6 Committed pipeline (4) : (UPB in billions) $1.3
10 DRIVERS OF PRODUCTION SEGMENT PROFITABILITY (1) Expected revenue net of direct origination costs at time of lock (2) Reflects timing of revenue and loan origination expense recognition, hedging, pricing & execution changes, and other items (3) Costs are fully allocated Production expenses net of Loan origination expense • Direct lending channels have outsized impact on Production earnings – represented 31% of fallout adjusted lock volume (including PMT’s conventional lock volume) in 4Q21, but approximately 90% of segment pretax income • Production revenue margins were higher in both direct lending channels – revenue per fallout adjusted lock for PFSI’s own accoun t was 113 basis points in 4Q21, down from 165 basis points in 3Q21 • Costs (3 ) vary by channel – ranging from approximately 10 basis points in correspondent to 140 basis points in consumer direct; as the mi x shift towards direct lending continues, production expenses as a percentage of fallout adjusted locks are expected to trend higher Fallout Adjusted Locks Margin / Fulfillment Fee (bps) (1) Revenue Contribution (net of Loan origination expense) % of Production Revenue Fallout Adjusted Locks Margin / Fulfillment Fee (bps) (1) Revenue Contribution (net of Loan origination expense) % of Production Revenue Fallout Adjusted Locks Margin / Fulfillment Fee (bps) (1) Revenue Contribution (net of Loan origination expense) % of Production Revenue Government Correspondent 18,180$ 51 93.5$ 12% 15,661$ 27 42.9$ 8% 15,059$ 24 36.3$ 11% Consumer Direct 8,984 533 478.8 63% 11,678 382 446.7 80% 10,070 336 338.7 99% Broker Direct 4,351 205 89.0 12% 3,963 77 30.6 5% 3,155 68 21.4 6% Other (2) n/a n/a 22.0 3% n/a n/a (5.0) -1% n/a n/a (75.6) -22% Total PFSI account revenues (net of Loan origination expense) 31,515$ 217 683.3$ 90% 31,303$ 165 515.2$ 92% 28,284$ 113 320.8$ 94% PMT Conventional Correspondent 36,610 20 72.6 10% 28,301 16 43.9 8% 13,991 14 20.2 6% Total Production revenues (net of Loan origination expense) 111 755.9$ 100% 94 559.1$ 100% 81 340.9$ 100% Production expenses (less Loan origination expense) 27 183.2$ 24% 38 228.5$ 41% 55 234.4$ 69% Production segment pretax income 84 572.6$ 76% 55 330.6$ 59% 25 106.5$ 31% 4Q21 42,275$ 3Q21 59,604$ 4Q20 68,126$
PRODUCTION SEGMENT HIGHLIGHTS – BUSINESS TRENDS BY CHANNEL 11 • Pennymac remains the largest correspondent aggregator in the U.S . with 768 correspondent sellers • Purchase volume in 4Q21 was $21.6 billion, down from $28.9 billion in 3Q21 and $24.5 billion in 4Q20 • Lower fulfillment fees Q/Q driven by decline in conventional acquisition volumes and discretionary reductions made by PFSI to facilitate successful loan acquisition activity by PMT ‒ Impacted by significant levels of competition for conventional loans, including from the GSEs • Correspondent volume drives servicing portfolio growth while generating additional leads for consumer direct • Profitability driven by low cost structure and operational excellence • Continued success in the channel driven by: ‒ Expanding opportunity to serve customers in our large and growing servicing portfolio ‒ Purchase lock volume in 4Q21 was $784 million, essentially unchanged from 3Q21 and up from $505 million in 4Q20 ‒ New Customer Acquisition interest rate lock commitments in 4Q21 totaled $1.9 billion, down from $2.0 billion in 3Q21 and up from $1.3 billion in 4Q20 • Margins remain attractive but declined from 3Q21 levels • Future growth expected to be driven by the changing demands of our servicing portfolio customers as we leverage investments in technology and marketing • Funding volumes were down slightly from 3Q21 as we maintain pricing discipline • Approved brokers totaled 2,148 at December 31, 2021, or approximately 15% of the total population of brokers ‒ Large opportunity with approximately 15,000 brokers and non - delegated sellers active in the market • The channel remains competitive with margins that declined further from 3Q21 levels • Remain optimistic for continued growth in the channel supported by significant investments in technology and the introduction of new products CORRESPONDENT CONSUMER DIRECT BROKER DIRECT Multi - channel approach provides flexibility and has proven to be a competitive advantage, supporting profitability and pricing discipline while driving growth of the servicing portfolio
$495.4 $509.7 ($32.8) $47.1 At 9/30/21 Runoff Additions from loan production At 12/31/21 SERVICING SEGMENT HIGHLIGHTS 12 • Servicing portfolio totaled $509.7 billion in UPB at December 31, 2021, up 3 % Q/Q and 19% Y/Y • Strong production volumes led to continued portfolio growth despite elevated prepayment activity • Decrease in delinquency rates as borrowers continue to emerge from forbearance plans with the successful implementation of loss mitigation activities • Decrease in EBO loan volume as a result of a declining population of loans eligible to be bought out • Increase in modifications driven by forbearance exits from EBO loans previously sold to third parties Loan Servicing Portfolio Composition (UPB in billions ) Net Portfolio Growth (UPB in billions ) (1) Owned portfolio is predominantly government - insured and guaranteed loans under the FHA (39%), VA (36%), and USDA ( 8 %) programs. Delinquency data based on loan count (i.e., not UPB ). CPR = Conditional Prepayment Rate. (2) Represents PMT’s MSRs. Excludes distressed loan investments (3) UPB of completed modifications includes loss mitigation efforts associated with partial claims programs (4) Early buyouts of delinquent loans from Ginnie Mae pools during the period (5) Also includes loans sold with servicing released in connection with any asset sales by PMT (6) Includes consumer and broker direct production, government correspondent acquisitions, and conventional conforming and jumbo lo an acquisitions subserviced for PMT (5) (6) $426.8 $495.4 $509.7 12/31/20 9/30/21 12/31/21 Prime owned Prime subserviced and other 3Q21 4Q21 Loans serviced (in thousands) 2,111 2,147 60+ day delinquency rate - owned portfolio (1) 6.1% 4.7% 60+ day delinquency rate - sub-serviced portfolio (2) 1.2% 0.9% Actual CPR - owned portfolio (1) 27.2% 23.5% Actual CPR - sub-serviced (2) 23.6% 19.8% UPB of completed modifications ($ in millions) (3) $4,700 $6,168 EBO loan volume ($ in millions) (4) $5,514 $3,663 Selected Operational Metrics
SERVICING PROFITABILITY EXCLUDING VALUATION - RELATED CHANGES 13 (1) Of average portfolio UPB, annualized (2 ) Comprised of net gains on mortgage loans held for sale at fair value and interest income related to EBO loans (3) Consists of interest shortfall and recording and release fees (4) Changes in fair value do not include realization of MSR cash flows (5) Considered in the assessment of MSR fair value changes • Operating revenue increased $24.6 million driven by an increase in servicing fees from a larger servicing portfolio; operatin g e xpenses as a percentage of average servicing portfolio UPB decreased • Realization of MSR cash flows increased $14.8 million as delinquent loans continued to rehabilitate and provide greater ongoing income to the MSR portfolio • EBO loan - related revenue increased $ 45.3 million driven by higher volume of modifications (see slide 12) • Payoff - related expense from prepayments remains elevated but decreased $3.4 million $ in millions basis points (1) $ in millions basis points (1) $ in millions basis points (1) Operating revenue 272.2$ 26.3 272.1$ 22.5 296.6$ 23.6 Realization of MSR cash flows (89.6) (8.7) (82.2) (6.8) (97.0) (7.7) EBO loan-related revenue (2) 233.3 22.5 160.6 13.3 206.0 16.4 Servicing expenses: Operating expenses (91.1) (8.8) (109.6) (9.1) (106.6) (8.5) Payoff-related expense (3) (39.5) (3.8) (36.4) (3.0) (33.0) (2.6) Losses and provisions for defaulted loans (12.6) (1.2) (15.7) (1.3) (13.6) (1.1) EBO loan transaction-related expense (5.9) (0.6) (4.8) (0.4) (3.9) (0.3) Financing expenses: Interest on ESS (2.0) (0.2) - - - Interest to third parties (30.6) (3.0) (35.6) (2.9) (30.6) (2.4) Pretax income excluding valuation-related changes 234.3$ 22.6 148.4$ 12.3 217.9$ 17.3 Valuation-related changes MSR fair value (4) (44.2) (65.5) (58.4) ESS liability fair value 6.7 - - Hedging derivatives gains (losses) (109.1) (86.5) (37.7) Provision for losses on active loans (5) (45.6) 11.5 4.3 Servicing segment pretax income 42.0$ 8.0$ 126.1$ Average servicing portfolio UPB 414,351$ 484,107$ 503,176$ 3Q21 4Q214Q20
($559) ($1,110) ($10) ($58) $405 $943 ($439) ($38) $528 $1,964 $938 $107 2019 2020 9M21 4Q21 MSR fair value change before recognition of realization of cash flows Hedging and other gains (losses) Production pretax income 14 HEDGING APPROACH MODERATES THE VOLATILITY OF PFSI’S RESULTS OVER TIME MSR Valuation Changes and Offsets ($ in millions ) • PFSI seeks to moderate the impact of interest rate changes on the fair value of its MSR asset through a comprehensive hedge strategy that also considers production - related income • In 4Q21 , MSR fair value decreased $58 million (1) , comprised of: – $28 million in fair value declines due to changes in interest rates, primarily due to a significant flattening of the yield curve – $30 million in other valuation declines, primarily due to increases to short - term prepayment projections • $38 million from decreases in hedging results: – Largely driven by elevated hedge costs during the quarter (1) Before recognition of realization of cash flows
TRENDS IN DELINQUENCIES, FORBEARANCE AND LOSS MITIGATION 15 30+ Day Delinquency Rate and Forbearance Trend (1) Forbearance Outcomes (2) • Overall mortgage delinquency rates have returned to pre - pandemic levels; however, delinquency rates of seriously delinquent loans (90+ days) remain elevated • In PFSI’s predominately government MSR portfolio, approximately 266,000 borrowers have been enrolled in a forbearance plan related to COVID - 19 since the enactment of the CARES Act – Through December 31, approximately 245,000 borrowers have exited or are in the process of exiting their forbearance plan including those borrowers that have paid - in - full • Servicing advances outstanding increased to approximately $564 million at December 31, 2021 from $430 million at September 30, 2021 – Advances increased from September 30, 2021 as expected due to property tax payments – No P&I advances are outstanding, as prepayment activity continues to sufficiently cover remittance obligations • Of the 0.8% reduction in forbearance related to re - performance – 0.2% were forbearances that remained current or went delinquent and subsequently became current – 0.6% were FHA Partial Claims or completed modifications Note: Figures may not sum due to rounding (1) Owned MSR portfolio. Delinquency and forbearance data based on loan count (i.e. not UPB). As of 12/31/21, 30+ day delinquency un its amounted to 92,564, forbearance units amounted to 20,459, total portfolio units were 1,327,362, and portfolio UPB was $288 billion. (2) Forbearance outcomes based on loan count as a percentage of beginning period loans in forbearance. 6.4% 12.4% 10.1% 7.8% 6.3% 4.9% 3.2% 1.5% 7.2% 15.1% 14.1% 12.6% 10.2% 9.0% 8.3% 7.0% 3/31/20 6/30/20 9/30/20 12/31/20 3/31/21 6/30/21 9/30/21 12/31/21 Forbearance Rate 30+ Day Delinquency Rate 1.5% 3.2% 0.8% 1.1% 0.1% 0.2% 0.9% 0.6% 9/30/21 Re- performing Active Loss Mitigation Paid- in-full 30+ DQ not in forbearance Extended New forbearances 12/31/21 Beginning period forbearance Ending period forbearance
INVESTMENT MANAGEMENT SEGMENT HIGHLIGHTS 16 • Net AUM as of December 31, 2021 were $ 2.4 billion, down 5 % from September 30, 2021, and up 3 % from December 31, 2020 ‒ Decrease in AUM primarily due to PMT’s net loss in 4Q21 • Investment M anagement segment revenues were $ 10.5 million, up 7 % from 3 Q21 and up 8 % from 4Q20 Investment Management AUM ($ in billions) Investment Management Revenues ($ in millions) $2.3 $2.5 $2.4 12/31/20 9/30/21 12/31/21 $9.7 $10.1 $10.5 ($0.3) $9.7 $9.8 $10.5 4Q20 3Q21 4Q21 Base management fees & other revenue Performance incentive
APPENDIX
18 PENNYMAC IS AN ESTABLISHED LEADER IN THE U.S. MORTGAGE MARKET WITH SUBSTNATIAL GROWTH POTENTIAL $197 billion in 2020 $510 billion outstanding IN SER VIC ING (1) YEARS FOR PFSI AS A PUBLIC COMPANY 8 14 YEARS OF OPERATIONS PMT # 2 • CORRESPONDENT PRODUCTION • CONSUMER DIRECT • BROKER DIRECT IN PRODUCTION (1) IS A LEADING RESIDENTIAL MORTGAGE REIT # 6 Note: All figures are for PFSI and include volume fulfilled or subserviced for PMT. All figures are as of 12/31/21 unless otherwise noted. (1) Inside Mortgage Finance for the 9 months ended or as of 9/30/21 $2.4 billion in assets under management 12 - year track record 2+ million customers $ 234 billion in 2021
OVERVIEW OF PENNYMAC FINANCIAL’S BUSINESSES 19 LOAN PRODUCTION Correspondent aggregation of newly originated loans from third - party sellers - PFSI earns gains on delegated government - insured and non - delegated loans - Fulfillment fees for PMT’s delegated conventional loans Consumer direct origination of conventional and government - insured loans Broker direct origination launched in 2018 LOAN SERVICING Servicing for owned MSRs and subservicing for MSRs owned by PMT Major loan servicer for Fannie Mae, Freddie Mac and Ginnie Mae Industry - leading capabilities in special servicing Organic growth results from loan production, supplemented by MSR acquisitions and PMT investment activity INVESTMENT MANAGEMENT External manager of PMT, which invests in mortgage - related assets: - GSE credit risk transfer investments - MSR investments - Investments in prime non - agency MBS and asset - backed securities Synergistic partnership with PMT Complex and highly regulated mortgage industry requires effective governance, compliance and operating systems Operating platform has been developed organically and is highly scalable Commitment to strong corporate governance, compliance and risk management since inception PFSI is well positioned for continued growth in this market and regulatory environment
0.0% 1.0% 2.0% 3.0% 4.0% 10-Year Treasury Yield $1.8 $1.3 $1.7 $2.1 $1.8 $1.6 $2.3 $4.1 $4.8 2013 2014 2015 2016 2017 2018 2019 2020 2021 U.S. Origination Market (in trillions) 48% 75% 64% 61% 73% 80% 63% 40% 45% 40% 58% 53% 49% 63% 71% 54% 36% 41% 2013 2014 2015 2016 2017 2018 2019 2020 2021 PFSI Purchase Mix Industry Purchase Mix 20 PFSI’S TRACK RECORD ACROSS VARIOUS MARKET ENVIORNMENTS IS UNIQUE AMONG INDEPENDENT MORTGAGE BANKS Proven ability to generate attractive ROEs… …across different market environments… …with a strong orientation towards purchase money mortgages. (1) Represents partial year. Initial Public Offering was May 8, 2013 . (2) Inside Mortgage Finance . (3) Bloomberg (4) Inside Mortgage Finance for historical data. Industry purchase mix for 4 Q 21 represents the average of Mortgage Bankers Association (1/21/22), Fannie Mae (1/20/22), and Freddie Mac (1/7/22) estimates. (1) (2) (3) (4) Average: 25% 11% 19% 20% 22% 26% 13% 22% 61% 29% 2013 2014 2015 2016 2017 2018 2019 2020 2021 PFSI's Annualized Return on Average Common Stockholders' Equity (ROE)
0.0% 1.0% 2.0% 3.0% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% CURRENT MARKET ENVIRONMENT AND MACROECONOMIC TRENDS 21 Average 30 - year fixed rate mortgage (1) 10 - year Treasury Bond Yield (2) Macroeconomic Metrics (3) Footnotes (1) Freddie Mac Primary Mortgage Market Survey. 3.55% as of 1/27/22 (2) U.S. Department of the Treasury. 1.80% as of 1/27/22 (3) 10 - year Treasury bond yield and 2/10 year Treasury yield spread: Bloomberg. Average 30 - year fixed rate mortgage: Freddie Mac Primary Mortgage Market Survey. Average secondary mortgage rate: 30 - Year FNCL Par Coupon Index (MTGEFNCL), Bloomberg. U.S. home price appreciation: S&P CoreLogic Case - Schiller U.S. National Home Price NSA Index (SPCSUSA). Data is as of 11/30/21 . Residential mortgage originations are for the quarterly period ended. Source: Inside Mortgage Finance. 1.51% 1.49% 3.11% 3.01% 12/31/20 3/31/21 6/30/21 9/30/21 12/31/21 10-year Treasury bond yield 0.9% 1.7% 1.5% 1.5% 1.5% 2/10 year Treasury yield spread 0.8% 1.6% 1.2% 1.2% 0.8% 30-year fixed rate mortgage 2.7% 3.2% 3.0% 3.0% 3.1% Secondary mortgage rate 1.3% 2.0% 1.9% 2.0% 2.1% U.S. home price appreciation (Y/Y % change) 10.4% 13.3% 18.7% 19.7% 18.8% Residential mortgage originations (in billions) $1,265 $1,305 $1,230 $1,195 $1,095
22 PFSI’S BALANCED BUSINESS MODEL IS A FLYWHEEL • Diversified business through correspondent, consumer direct and broker direct channels • Correspondent and broker direct channels in particular allow PFSI to access purchase - money volume • Lacks the fixed overhead of the traditional, retail origination model • Recurring fee income business captured over the life of the loan • In the event of higher interest rates, expected life of the loan increases resulting in a more valuable MSR asset • Creates a natural hedge to production income Customer base of over 2 million drives leads for consumer direct Large volumes of production grow servicing portfolio Loan Production 2 nd largest in the U.S. (1) Loan Servicing 6 th largest in the U.S. (1) (1) Inside Mortgage Finance for the year ended or as of September 30, 2021. Includes volume fulfilled or subserviced for PMT. In both businesses, scale and efficiency are critical for success
SERVICING PROFITABILITY EXCLUDING VALUATION - RELATED CHANGES 23 (1) Of average portfolio UPB, annualized (2 ) Comprised of net gains on mortgage loans held for sale at fair value and interest income related to EBO loans (3) Consists of interest shortfall and recording and release fees (4) Changes in fair value do not include realization of MSR cash flows (5) Considered in the assessment of MSR fair value changes $ in millions basis points (1) $ in millions basis points (1) $ in millions basis points (1) $ in millions basis points (1) Operating revenue 771.5$ 28.6 1,022.6$ 30.6 1,057.4$ 26.9 1,100.2$ 23.3 Realization of MSR cash flows (280.0) (10.4) (429.6) (12.9) (392.2) (10.0) (347.6) (7.4) EBO loan-related revenue (2) 171.4 6.4 147.1 4.4 527.3 13.4 858.3 18.2 Servicing expenses: Operating expenses (283.9) (10.5) (319.0) (9.5) (355.5) (9.0) (433.6) (9.2) Payoff-related expense (3) (27.3) (1.0) (41.4) (1.2) (116.7) (3.0) (156.0) (3.3) Credit losses and provisions for defaulted loans (58.5) (2.2) (75.6) (2.3) (47.8) (1.2) (54.8) (1.2) EBO loan transaction-related expense (41.2) (1.5) (59.8) (1.8) (31.9) (0.8) (26.9) (0.6) Financing expenses: Interest on ESS (15.1) (0.6) (10.3) (0.3) (8.4) (0.2) (1.3) (0.0) Interest to third parties (90.5) (3.4) (87.2) (2.6) (89.2) (2.3) (138.8) (2.9) Pretax income excluding valuation-related changes 146.5$ 5.4 146.8$ 4.4 543.0$ 13.8 799.6$ 17.0 Valuation-related changes (4) MSR fair value (5) 163.7 (559.0) (1,109.8) (68.3) ESS liability fair value (8.5) 9.3 25.0 (1.0) Hedging derivatives gains (losses) (121.0) 395.5 918.2 (475.2) Provision for credit losses on active loans (6) (8.3) (7.3) (114.1) 51.7 Servicing segment pretax income 172.3$ (14.8)$ 262.1$ 306.7$ Average servicing portfolio UPB 269,403$ 334,169$ 393,504$ 471,459$ 2018 202120202019
PENNYMAC HAS DEVELOPED IN A SUSTAINABLE MANNER FOR LONG - TERM GROWTH 24 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Operations launched; de novo build of legacy - free mortgage servicer Raised $500 million of capital in private opportunity funds PMT formed in an initial public offering raising $320 million Correspondent group established with a focus on operations development and process design Added servicing leadership for prime portfolio and to drive scalable growth Correspondent system launches Expanded infrastructure with flagship operations facility in Moorpark, CA Correspondent leadership team expands Expanded infrastructure in Tampa, FL Became largest non - bank correspondent aggregator PFSI completed initial public offering Expanded infrastructure in Fort Worth, TX Continued organic growth and servicing portfolio UPB reaches $100 billion (1) PFSI stockholders’ equity surpasses $1 billion Substantial growth in PFSI’s consumer direct capacity PFSI issued MSR - backed term notes PFSI launched broker - direct lending channel PFSI completes corporate reorganization Achieved position as the largest correspondent aggregator in the U.S. PFSI launched proprietary, cloud - based Servicing Systems Environment (SSE) Record production volumes across all channels; nearly $200 billion in UPB (1) PFSI issued inaugural $650 million of unsecured Senior Notes PFSI issued an additional $1.15 b illion of unsecured Senior Notes Servicing portfolio surpasses 2 million customers (1) (1) All figures are for PFSI and include volume fulfilled or subserviced for PMT. • Disciplined growth to address the demands of the GSEs, Agencies, regulators and our financing partners ‒ Since inception, PennyMac has focused on building and testing processes and systems before adding significant transaction vol ume s • Highly experienced management team has created a robust corporate governance system centered on compliance, risk management a nd quality control
25 MSR ASSET VALUATION (1) Weighted average Mortgage Servicing Rights Pool UPB $278,325 Coupon (1) 3.2% Servicing fee/spread (1) 0.34% Prepayment speed assumption (CPR) (1) 10.7% Fair value $3,878.1 As a multiple of servicing fee 4.14 December 31, 2021 Unaudited ($ in millions)
ACQUISITIONS AND ORIGINATIONS BY PRODUCT 26 First Lien Acquisitions/Originations Note: Figures may not sum exactly due to rounding Unaudited ($ in millions) 4Q20 1Q21 2Q21 3Q21 4Q21 Correspondent Acquisitions Conventional Conforming 37,986$ 33,762$ 30,479$ 28,605$ 17,157$ Government 18,923 17,440 16,175 15,375 15,651 Total 56,908$ 51,202$ 46,654$ 43,980$ 32,808$ Consumer Direct Originations Conventional Conforming 3,659$ 4,634$ 5,012$ 6,200$ 6,311$ Government 4,356 6,023 5,661 4,932 4,289 Total 8,015$ 10,657$ 10,672$ 11,131$ 10,600$ Broker Direct Originations Conventional Conforming 3,527$ 3,959$ 3,246$ 3,086$ 2,823$ Government 956 1,158 728 902 860 Total 4,484$ 5,117$ 3,974$ 3,988$ 3,684$ Total acquisitions/originations 69,407$ 66,976$ 61,300$ 59,099$ 47,092$
INTEREST RATE LOCKS BY PRODUCT 27 First Lien Locks Note: Figures may not sum exactly due to rounding Unaudited ($ in millions) 4Q20 1Q21 2Q21 3Q21 4Q21 Correspondent Locks Conventional Conforming 39,451$ 33,998$ 30,332$ 29,411$ 14,717$ Government 19,728 17,064 15,657 16,230 15,544 Total 59,179$ 51,062$ 45,990$ 45,641$ 30,261$ Consumer Direct Locks Conventional Conforming 5,711$ 6,337$ 7,486$ 9,625$ 8,264$ Government 7,126 7,047 6,621 6,701 5,937 Total 12,837$ 13,384$ 14,108$ 16,326$ 14,200$ Broker Direct Locks Conventional Conforming 4,375$ 4,634$ 3,387$ 3,745$ 2,884$ Government 1,341 1,036 1,119 1,131 984 Total 5,716$ 5,671$ 4,506$ 4,876$ 3,867$ Total locks 77,731$ 70,117$ 64,604$ 66,843$ 48,329$
4Q20 1Q21 2Q21 3Q21 4Q21 4Q20 1Q21 2Q21 3Q21 4Q21 Government-insured 714 707 702 700 693 Government-insured 36 37 42 42 42 Conventional 768 761 757 755 750 Conventional 33 34 34 35 36 4Q20 1Q21 2Q21 3Q21 4Q21 4Q20 1Q21 2Q21 3Q21 4Q21 Government-insured 720 719 708 706 704 Government-insured 39 39 39 40 40 Conventional 759 757 748 744 742 Conventional 32 32 33 33 34 4Q20 1Q21 2Q21 3Q21 4Q21 4Q20 1Q21 2Q21 3Q21 4Q21 Government-insured 753 743 726 731 720 Government-insured 43 43 43 42 44 Conventional 768 767 760 760 755 Conventional 32 33 34 34 35 Weighted Average FICO Weighted Average DTI Weighted Average FICO Weighted Average DTI Weighted Average FICO Weighted Average DTI CREDIT CHARACTERISTICS BY ACQUISITION/ORIGINATION PERIOD 28 Correspondent Consumer Direct Broker Direct
